In an article posted in their online Newsletter recently, Anreini and Company (an employee benefits and risk management firm) wrote that almost 75 % of all legal issues against companies, whether it is a manufacturing, importing, retail or healthcare company, involves employee disputes. Based on recent data, it appears that taking a good look, spending some time studying and understanding employment practices, trends, and risky hot spots (things that are likely to result in a claim) makes a lot of sense for all business owners.

And, in our experience of writing insurance effort physicians and healthcare providers is that the professionals are even more at risk because he value that they bring to the company is their own personal mastery. In other words, professionals and skilled craftspeople who build a business around their talent are less likely to spend the necessary time avoiding or understanding the risk.

It is a fact that an employer is more likely to have an employment practices liability claim (that is to say, a law suit involving sexual harassment, discrimination, failure to promote, disputes of wages and hours, wrongful termination, these claims are more common and likely than property or general liability claims.

Almost 100,000 of these claims were filed in 2011 against employers under the Equal employment Opportunity Commission. And, almost one half of these employment practices liability issues are filed against small businesses with 15 – 50 employees.

Employment Practices Liability Claims involve the most common "big three" : these claims are likely to present and, they do not go away without a lot of diligent discovery and careful review of documentation by the employer.

The three most common types of lawsuits brought against employers are: widely defined by insurance policies that provide employment practices liability insurance, the three common area of claims are defined as:

Wrongful Termination – the discharge of an employee for invalid reasons

Discrimination - the denial of equal treatment of workers who are members of a protected class

Sexual Harassment – when a worker is subject to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behavior

Recently, we had a situation where a front office worker in a medical office was repeatedly showing up for work late, speaking rudely with patients, patient’s families and even the physicians who phoned the office to ask referral or medical questions. You would never be rude to the clients or the bosses or the associates of bosses, that would surely end up with an indefensible firing.

However, in this situation, the employer chose to be very careful, outlining a three month play by the rules and contribute and during this period the company will monitor your behavior, thus, giving the employee a chance to save face and change the experience at the job during this very tough job market.

And, in this situation, the employer (a Physician) has to document carefully:

California is an at-will employment state, but anyone can sue anyone for anything (almost). The employer, to avoid a lawsuit, bent over backwards to put a termination process in place, to define this three month probationary period designed to create documentation that would hold up in court in the case of a law suit.

That is what we want to do for each of our policyholders, we want to work with our human resources consultants and attorneys to help our physicians design a process that will avoid these costly claims. Because the economy has been so challenging, it is guessed by analysts that companies are out of practice, they are not conducting layoffs by checking with legal counsel, human resources or risk management about the legal and proper ways to lay someone off. The Equal Employment Opportunity Commission reports that workplace discrimination claims are up 31 percent over 2006, the simple logic that is offered by an analyst at Woodruff & Sawyer Company is that there are just more people that have been laid off, the numbers support that there are more people with something to fight for and with the energy to feel very offended by their life situation. There are a lot of people out of work still. The more layoffs and firings that occur, the greater the potential pool of workers who may claim that they have been discriminated against.

Physicians can work with our employment practices liability risk managers to design plans to stay off of the claim radar.

Proper practices in the following areas are important to managing the growing risk of an employment practices claim:

Recruitment practices

Employment applications

Employment offers

Employee orientation

Annual conduct reviews

Enforcing performance policies

The important elements to remember are to measure performance in an objective, scientific and fair manner, to provide professional, regular and scheduled feedback to the employees so that you can see that they see where they re and to make sure that the company’s organization, structure and culture supports the goals and mission.

Reviewing reserves relative to premium and surplus is an integral part of picking any insurance company where there is a long tail.

In addition to having the appropriate employment policies and HR best practices in place, EPL insurance coverage is another useful risk management tool to defend against a suit or pay a claim. We recommend that every employer review their current Employment Practices coverage and procedures to be sure proper risk management tools and insurance coverage are in place. We would be happy to review your coverage or answer questions for you.